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Saturday, July 31, 2010

Indianapolis Motor Speedway Is Struggling

A few months ago, I publicly challenged Mayor Greg Ballard's overt pandering to the Simon-owned Indiana Pacers, which contribute very little to the local economy compared to the Indianapolis Motor Speedway. I asked Mayor Ballard in front of the Washington Township Republican Club if he was even aware of what was taking place out at the IMS and the long-term economic impact its downward spiral could have on the local economy. A red-faced Ballard dismissed the concerns I raised and said the IMS was doing just fine. Ballard's only interest in the IMS is how he can personally gain from it, including plenty of free tickets and feasting on buffets in the corporate suites. He planned another one of several overseas junkets he has taken since becoming mayor around an inaugural IRL race in Brazil earlier this year.

Today, Anthony Schoettle has a story in the IBJ describing the negative impact the fall off in attendance at the NASCAR Brickyard 400 event at the IMS is having on the future of the Indy Racing League. It turns out that the Hulman-George family has relied heavily on revenues from its NASCAR event to subsidize the IRL, which is bleeding money badly. Schoettle writes:

Motorsports insiders think the Brickyard 400’s declining fortunes will hasten the Hulman-George family’s decision on the future of the Indy Racing League, which the NASCAR race has helped subsidize.

IMS CEO Jeff Belskus, who replaced Tony George in June 2009, said the Brickyard 400 remains “very profitable.”

“It’s a strong event for us,” he said.

Few dispute that, but racing analysts now think the IRL’s losses exceed the Brickyard 400’s profit, and that could be a major rub for the board that controls the Indianapolis Motor Speedway and IRL.

Since the IRL’s inception in 1996, the board, which is four-fifths Hulman-George family members, has used Brickyard 400 profits to support the open-wheel series. But now the Brickyard’s raging revenue stream has slowed considerably.

A feud among board members over money following the 2009 Indianapolis 500 led to the departure of former IMS and IRL boss Tony George. Now there’s speculation the diminished financial firepower of the Brickyard 400 could lead to other changes.

“The balance sheet is what led to Tony George’s ouster, so you know the balance sheet has [the board's] attention,” said Zak Brown, president of Just Marketing International, a local firm that represents some of the biggest sponsors in motorsports.

“All the money goes in the same bank account, and they’re writing a lot of checks for IndyCar. You have to believe they’ve set a firm amount on what they’re willing to spend on the open-wheel series.”

Most with knowledge of Speedway finances think that amount is directly related to what the Brickyard 400 generates in profit.

Schoettle cites experts who estimate the IRL has lost a staggering $400 million since its inception in 1996. "Sources close to the IRL said the series lost $22 million in 2009 and is headed for another eight-figure loss this year, he writes. "IRL officials have cut $2 million in overhead in the last year, have raised $3 million in cash annually with a new title sponsorship deal with Izod, and tallied $2 million in profits from the series’ popular Brazil race, said motorsports business experts." "That still leaves a $15 million hole to close."

The financial impact of the IMS on the local economy dwarfs any benefit derived from Herb Simon's Indiana Pacers. Yet we continue to subsidize the billionaire Simon tens of millions of dollars annually, while the Hulman-George family has never received any public subsidies for the IMS, which they own and maintain at their expense and pay property taxes on. To my knowledge, the Hulman-George family has never asked for a public handout from taxpayers either. Instead of wasting our money on the Pacers, Mayor Ballard should be paying more attention to what is happening at 16th & Georgetown Road.

I'm waiting for the new management of IMS to begin negotiations with the City for taxpayer support. Hundred million to this sport, hundred million to that sport, why not another hundred million for the one that is inextricably tied to Indianapolis? At some point, maybe sooner, maybe later, the negotiations will commence.

TVGizmo is correct. George had a good product yet-4 some reason-thought he had 2 tinker w/it. True, it wasn't as popular as NASCAR, but it had a good number of fans. Some people just don't understand when they have a good thing going.

It's already started if you've been following the Speedzone project out in Speedway. Taxpayer funds are being used to acquire property around the Speedway. There will be a zone creased around the Speedway for a racing theme park to operate 12 months of the year. (Like some0one is coming to Speedway in January for the racing theme park.) That area will be turned over to the Speedway.

Speedway has a redevelopment commission made up of people who stand to profit from the project. There were deals cut in the backroom followed by horse & pony shows to pretend the community had a say on redevelopment.

Everyone I talked to in Speedway is in favor of redevelopment. It's the "how" that's the kicker. Doing things like closing Georgetown Road is going to affect a lot of people lives' negatively.

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